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How Has Globalisation Affected The World Economy?

2802 words - 11 pages

How has globalisation affected the world economy? Discuss.Globalisation what is it? How has it affected the world's economics? How will it continue to affect the global village? Is anyone being adversely affected?Globalisation - is the movement of goods, services and money capital or investment across international boundaries and in this way becomes a predominately economic phenomenon sweeping the world. Throughout which, what were formerly national companies become international conglomerates. Hence, countries are no longer seen as independent and closed sovereign states, but as part of one big economy.While still seen as a relatively new event, globalisation is in fact an extension of a trend which dates back well over two hundred years, when it was simply called colonisation. During this period a well known economic theorists (David Ricardo) published a book in which he developed a theory called comparative cost advantage. In this he notes that countries should specialize in areas of production where their comparative cost advantage was greatest or their disadvantage least. International free trade and specialization, he argued would lower prices, better incomes and raise living standards, thus in turn with better transport and communication contributed to the development of globalisation.Primarily this shift in thinking is driven by corporate America's insatiable appetite to open new frontiers in emerging countries, and claim a monopoly on the source and distribution of products. All of which in short is because they are searching for more profit and a lower cost. Globalisation is also heavily backed by international consumerism, which is seen as the dominant 'religion' of the era, this means that the fruits of this global production are rapidly sought after and indeed hungrily consumed.Initially this flood of products into the local markets of major economies causes prices to decrease. Whilst this lower cost to consumers contributes to a higher standard of living it is short lived, globalisation also brings the world closer to a central economy. This is similar to the one currency euro program being instituted in Europe (E.U).In their endless search for greater profits they turn to the less wealthy, such as many of the Asian (Korea, China , Vietnam) while the same can be said for only a few African countries . Large numbers of the poorer (or developing) countries now have rapidly rising employment rates . This is due mainly to the fact that with a lower standard of living in these countries people are prepared to work for significantly less, and still produce the same product.As local producers (in Major Economies (G8)) cut profits to lower the production costs of their products, there are local job losses in the short term , but long term the outlook for these companies, their investors and workforce is usually a much bleaker one. As these companies are slowly yet inevitably forced out. The now multi-nationals such as, Nike, Fosters, BHP...

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